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How R&D Tax Credits can revitalise loss-making businesses

Updated: May 18, 2023


The loss-making phase.


It’s a challenge that all businesses have faced at one point or another.


Sometimes, it may feel like quicksand – the harder you try to get out, the deeper you sink in.


But every cloud has a silver lining.


Within the world of research and development, a government incentive exists that favours loss-making companies, providing them with a great deal of financial support.


Introducing - R&D Tax Credits!



What are R&D Tax Credits?


R&D Tax Credits were introduced to offer financial reward for UK innovation. After a startup or SME surpasses their first financial year, R&D Tax Credits allow them to claim back a large portion of the research & development expenditure that was used to build their project.


This scheme opens the door for game-changing re-investment into the growth of your product or service.


The amount of R&D spending a business is entitled to reclaim depends on their financial position.


If your SME is turning over a profit, your R&D Tax Credit claim can get you up to 21.5% of eligible costs back. This will be rewarded in the form of a tax deduction.*


However, if your loss-making, the government allows up to 27% of research and development expenditure to be reimbursed as cash, direct into your bank account.


So, loss-making R&D projects in the UK are not only offered the most financial support from R&D Tax Credits, but they’re also one of the only instances where support is given in the form of cash – ready to use on the next business strategy.


By taking advantage of R&D Tax Credits whilst your loss-making, you’ll inevitably speed up the process of reaching your profitable milestone.


If your research and development project is yet to make profit, and you’re not claiming R&D tax relief, you’re missing out on the best possible support scheme.


The only way that your SME could be restricted from the lucrative SME Tax Credit scheme is if your company has more than 500 employees, over €86M in gross assets, and brings in over €100M in turnover.


Exceeding these metrics would mean filing under the RDEC R&D Tax Credit scheme, which operates at around 10.5% of research & development expenditure.


But for most – that’s a long way down the road.



How to claim R&D Tax Credits


With the help of an experienced advisor, the claim process is easy.


Claim Capital provides a seamless R&D Tax Credit service, that takes care of your application from start to finish.


By jumping on a call with our R&D Tax Credit specialists, we can quickly determine whether your eligible for R&D Tax Credits, and if so, which scheme is right for you.


From there, we’ll identify every penny of research and development expenditure that can be reclaimed. Our attention-to-detail makes all the difference. In fact, in the past we uncovered that a client of ours had previously underclaimed by £32,000.


After receiving sufficient information, Claim Capital pledge to submit your R&D Tax Credit claim to HMRC within 3-5 working days.


And we’ve saved the best till last…


Our entire service comes at absolutely no cost, until your R&D Tax Credit claim has been approved by HMRC. Then, and only then, do we operate on a £3,000 Fixed Fee.



Don’t give up!


Here at Claim Capital, we know that the road to business success is a bumpy one. That’s why we’re dedicated to providing innovative startups and SMEs with the financial support they need to reach their growth potential.


So, don’t shy away from your mission when your research & development project is loss-making. Instead, take advantage of the leg-up provided by R&D Tax Credits.


If you’re wondering whether your business is eligible, or are concerned that your current advisor isn’t maximizing your claim – reach out to our R&D specialists.


We’ll be happy to run you through a free consultation.



*These are the updated figures in line with the new legislation announced in the April 2023 Spring Budget.



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